The global leaders of the legal practices at the Big Four accounting firms have been frank about their goals. They claim not to have interest in the top-shelf work on either the litigation or M&A side, instead emphasizing that there’s plenty else for them to grab. Cornelius Grossmann, the top dog at EY, put it bluntly in an interview earlier this year: “Our ambitions are really to grow rapidly into the market.” His counterparts have spoken similarly.
A look back at 2018 shows they’re backing up the talk. Asia has been a particular target, with a flurry of openings in Hong Kong and Singapore. In the U.S. both Deloitte and PwC made big splashes into the immigration law arena. All of the Big Four now have “alternative business structure” licenses that allow them to operate legal businesses in the U.K. And EY boosted its technical capabilities with the purchase of a managed services provider previously backed by DLA Piper.
Here’s a rundown:
The top international law firms are already entrenched in Hong Kong and Singapore, but in 2018 it became increasingly clear that the Big Four see room for their own legal practices in Asia’s twin financial capitals.
PwC and EY once again plunged into the Singapore marketplace after stepping back from earlier attempts. The former launched a new local law practice with a veteran hire from local firm WongPartnership, while the latter made its move with a four-lawyer team from Dentons Rodyk & Davidson. Deloitte followed shortly after, registering its own foreign law practice in Singapore for the first time in July.
In Hong Kong, Deloitte confirmed in November that it will launch a 25-lawyer law practice in January with six partners, all hired from local firms, focusing on corporate and commercial matters. EY and PwC made significant moves to grow their existing Hong Kong practices. And KPMG has also indicated plans to open its own 20-lawyer firm in the city by the end of the year, although a formal announcement has yet to be made.
Deloitte was the first to pounce, announcing a “first of its kind” alliance with U.S. immigration law firm Berry Appleman & Leiden in June. Then, in September, PwC linked up with immigration specialist Fragomen, wedding its 170-country immigration practice to the New York-based firm’s 550 lawyers in 25 countries.
Facilitating global mobility is becoming an increasingly important business offering for these massive organizations, and immigration law is a key component. Like other core Big Four practices—tax, for example—immigration law is heavy on process and lends itself to the application of technology.
“There’s a lot about the immigration practice that makes sense: the ability to think about efficiencies, technology and high volume,” said J. Stephen Poor, chair emeritus of Seyfarth Shaw. “Those are characteristics that play right to the Big Four’s strengths.”
Consequently, it wouldn’t be shocking if KPMG and EY were themselves currently hunting for their own immigration law partners.
In May, Deloitte became the final Big Four firm to receive an alternate business structure (ABS) license, allowing it to offer legal services in the U.K.
ABS licenses, first introduced in 2012 under the Legal Services Act, allow companies to run their own legal arms while also making it possible for law firms to accept external investment and be owned by nonlawyers. PwC, KPMG and EY all landed their own licenses in 2014.
“We were keen not to replicate a traditional law firm, but what we started to see is a change emerging, where with our core skills, such as digital, risk advisory, developing or managing projects for clients, the legal services market was offering an opportunity for us,” Matt Ellis, managing partner for tax and legal at Deloitte UK, told The American Lawyer affiliate Legal Week earlier this year. ”We spent a year evaluating that, talking to GCs, and we decided we are uniquely placed to bring that combination of skills to make a move into this market.”
Managed Legal Services
If the examples of Asia, immigration law and ABS licenses suggest that the Big Four are all making similar strategic choices, EY is the first—but likely won’t be the last—of the group to acquire an alternate legal services provider.
It did so in August, with the purchase of Riverview Law, which was launched in 2012 with financial backing from DLA Piper. The U.K.-based company, known primarily for its use of technology that builds dashboards of a company’s legal work so it can be handled and tracked more efficiently, might be one of the smaller players in the emerging ALSP space. Still, the deal is one further signal of the Big Four’s eagerness to expand their profiles in legal. It also allows EY to offer existing and new clients a cheaper, more efficient solution for handling “day-in, day-out” legal work.
The Big Four have made it clear that they’re not just looking to bolster their market share; they’re also competing for talent. In 2018, they were especially aggressive in Asia: PwC’s Hong Kong legal affiliate brought on lawyers from Baker McKenzie, Jones Day and Mayer Brown, while EY’s affiliate in the city brought on a three-lawyer disputes team from Dechert.
But the events of the year also revealed that Big Law remains an appealing destination for veteran lawyers who had earlier gone to sample what the Big Four had to offer. King & Spalding and Weil, Gotshal & Manges both brought in top tax lawyers from KPMG, with the former landing a partner-in-charge of its U.S. international tax practice and the latter bringing in a partner-in-charge of its Washington national tax practice.
Other firms hiring from the Big Four in the U.S. included Baker & Hostetler and Kirkland & Ellis, while three U.K. firms also made senior hires from EY in the fall. And when former White & Case partner Michael Lebovitz made the move from PwC to Mayer Brown, he praised the Big Four firm’s ambitions, but noted that he was barred from providing tax and legal services to some of its audit clients.